Mineral Rights Inheritance – What Is Fragmentation?
September 15, 2017
When property is handed down within a family, typically any mineral rights owned by the original owner are handed down with it. If you have inherited this type of property, you may be looking to sell your mineral rights.
Before you can do this, it is essential that you verify ownership of the mineral rights for sale, which is a process that is becoming more challenging every day. This is due to fragmentation, which has affected ownership of a large number of mineral estates today.
What Is Mineral Rights Fragmentation?
Fragmentation or fractionalization is the continual division of mineral rights into smaller and smaller pieces, either through inheritance or the sale of portions of an owner’s mineral estate. This occurs when successive generations of owners who do not wish to sell their mineral rights pass them down to multiple people, such as when parents pass their estate to their children.
For example, if parents have four children, their estate may be divided into four parts, with each portion being passed down to a child. When each child passes their estate to their children, the estate which was already only a fraction of the entire estate owned by the parents is further divided.
Over generations, this has resulted in what may have once been a very large mineral estate being divided over and over again to the point that the original estate has many different owners.
Why Is Fragmentation Such A Problem Today?
Due to fragmentation, there are many people who own very small mineral estates in comparison to what their grandparents and great-grandparents owned. Since the upkeep on these estates may not be worth the small returns gained through leasing, many choose to offer their mineral rights for sale rather than deal with the financial and tax issues.
The problem is that after all the fractionalization over the generations as well as confusing ownership records, determining ownership of each small estate to allow an owner to sell their mineral rights is more difficult now than it has been in the past.
Do You Truly Own Your Inheritance?
If you inherited a mineral estate, you must confirm ownership, regardless of whether you want to lease your rights and collect royalties or list your mineral rights for sale. Because of fragmentation, private sales, and poor record keeping over the years, it is always possible you may not even own what you inherited if it was already rightfully sold or passed to someone else.
The most reliable way to confirm ownership is to hire a landman who specializes in researching estate ownership. A landman will go all the way back to the first owner in order to determine who actually owns an estate. Once a landman verifies ownership, you can then sell your mineral rights since they have been legally confirmed as yours.
Fragmentation is an ongoing problem that affects the passing and sale of mineral rights. While it is great that you have inherited a portion of your relative’s Texas estate, you must be careful with what you try to do with it before confirming ownership.
If it is determined that you are the legal owner, you may then pass it on to your relatives or sell your mineral rights. If a qualified landman determines someone else is the owner due to improper documentation of ownership through the generations, then it is only that person who may list the mineral rights for sale!
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